Big business wins over public services with corporation tax black hole

“The government’s planned cuts to corporation tax look set to cost the public purse billions more in lost revenue than previously thought, according to new analysis.

The tax rate on company profits is slated to be cut from its current level of 19% to just 17% by the end of the decade. But even before the planned cuts, the UK already had one of the lowest corporation tax rates in the developed world.

An analysis based on HMRC data suggests that the loss of revenue from the planned cuts, initiated by former chancellor George Osborne but supported by incumbent Philip Hammond, could add up to more than £6bn.

HMRC recently raised its estimate for the amount a 1 percentage point increase in corporation tax could bring in for the Treasury from £2.8bn to £3.1bn per year – meaning the plan to cut taxes by 2p in the £1 could cost about £6.2bn.

Hammond confirmed in the autumn that he would go ahead with Osborne’s promises, despite the need to find £20bn a year more for the NHS by 2023-24.

There has been mounting opposition to the planned tax cuts, particularly as Britain’s public finances could come under huge strain from a disorderly Brexit.

Rupert Harrison, a former adviser to Osborne who now works at City investment firm BlackRock, said last week on Twitter that it was “hard to see why further cuts to corporation tax are good value,” while Labour seized on his comments.

Peter Dowd, the shadow chief secretary to the Treasury, said: “Even Osborne’s former adviser knows that further cuts to corporation tax are a bad use of public funds. Philip Hammond should cancel his plans for more corporate giveaways and invest in our public services.” …”

https://www.theguardian.com/politics/2019/jan/28/uk-corporation-tax-cut-to-cost-billions-more-than-thought

Why do we “need” Sidford Business Park when we have the Science Park Enterprise Zone down the road?

Enterprise Zones give favourable start-up arrangements such as business rate relief to businesses that take space in them – Sidford is not in an Enterprise Zone.

“East Devon District Council’s Cabinet last night agreed to invest £1.1m in the development of a new Open Innovation Building at Exeter Science Park, in the Exeter and East Devon Enterprise Zone.

The investment will bring forward 20,000 square feet of space under one roof for growing small and medium sized enterprises (SMEs) in science, technology, engineering, maths and medicine (STEMM) sectors.

Funding has been raised against future business rates income from the growing list of businesses seeking to establish offices and laboratories alongside leading regional science and tech companies already based at Exeter Science Park.

Councillor Ian Thomas, Leader of East Devon District Council said: “The Exeter and East Devon Enterprise Zone is a significant and strategically important development site for the area, with the potential to create over 10,000 jobs.

“This investment will bring forward the opportunity for up to 158 high value jobs in the Open Innovation Building for local people as well as boosting the local economy.

“The £1.1m grant is 15% of the total cost of the building, providing an additional 20,000 square feet of employment space at the Science Park. It means the Open Innovation Building can be ready for occupation in the second half of 2020.”

The Enterprise Zone investment will help fund the building, including the fitting-out.

Dr Sally Basker, Chief Executive of Exeter Science Park Limited said: “Exeter Science Park is growing rapidly and is on-track to become a community of around 700 people by 2021.

“The Science Park helps innovative STEMM companies to deliver extraordinary growth and this Enterprise Zone grant will help us meet accommodation needs of STEMM businesses – both those already located at the Science Park and new firms wishing to take the next step in their growth journey and create a sustainable business.”

Steve Hindley CBE DL, Chair of the Heart of the South West Local Enterprise Partnership, said: “Exeter and East Devon Enterprise Zone is part of the Heart of the South West’s multi-site enterprise zones offering economic opportunities in the area’s key sectors. These enterprise zones, with other sites at Oceansgate in Plymouth and at Gravity in Somerset, enable the local areas to retain a greater share of business rates to re-invest and attract new jobs and growth.”

Councillor Rufus Gilbert, Devon County Council Cabinet Member for Economy and Skills, said: “This is another welcome investment in the Exeter and East Devon Enterprise Zone. The site is key to economic growth in Devon and the Open Innovation Building will add to the portfolio of excellent facilities being developed within the Zone. New infrastructure will attract new businesses and help create high value job opportunities in the area.”

The Exeter and East Devon Enterprise Zone is in its second year of operation, with businesses benefiting from Government-funded business rate relief.

In April 2018 the Council agreed in principle to borrow up to £8m, with detailed approval for £3.4m of expenditure. Projects include the launch in September 2018 of an enhanced ConnEXions bus service with free wifi, a park and change site near Exeter Science Park which will be delivered this year, and design work for an upgrade to Long Lane adjacent to Exeter Airport.”

https://heartofswlep.co.uk/news/east-devon-district-council-agrees-1-1m-enterprise-zone-investment-exeter-science-park/

More rural bad news: “Bus travel: Fewer passengers as funding falls”

Buses are the most common mode of public transport, accounting for 60% of all trips.

But on the buses, passenger numbers are falling.

There were 9% fewer journeys on local bus services in Britain in the first three months of this financial year than in the same period a decade ago.

The Campaign for Better Transport says this is partly down to cuts to the amount local authorities England and Wales are spending on buses.

In the past seven years, council spending on buses has fallen by 45%, according to figures released to the campaign group under the Freedom of Information law.

Outside London, buses are largely run by private companies, which make their money from passenger fares. Then, local councils pay subsidies to plug the gaps, often in rural areas where running a route is more expensive or less lucrative for companies.

Areas where running a bus service is the least lucrative for private operators will rely most on council subsidy – and so be most effected by the cuts.

In 2017-18, there were 11 councils in England that spent nothing at all on running bus services.

This has meant 3,000 routes being reduced or scrapped since 2010-11.

There are significant differences in fares, too.

Between September 2017 and September 2018 in London, fares rose by 0.4% – in the capital, buses are still public and regulated.

In other metropolitan areas in England where fares are left to the free market, there was an average 2.4% increase, while in non-metropolitan areas fares rose by 7.9%.

But if bus cuts and fare rises leave some people unable to get around, don’t councils have a duty to do something about it?

In fact, councils have very few specific obligations around buses, making them an easy target for councils as the cuts bite.

There are specific things they legally have to do, for example provide transport for children otherwise unable to get to school.

They also have to make sure there are concessionary fares for older and disabled people. Although this is partly funded by central government, the grant has been falling, leaving councils to make up the difference.

But other than that, they are not obliged to fund buses and ensure everyone has access to them.

What do councils have to do?

It’s possible a council could be challenged in the courts under equality legislation if it could be shown to be disproportionately restricting certain groups of people.

But legal guidance suggests it would be difficult to challenge a council if it could show it had assessed the needs of a local area and the impact of removing a bus service, particularly on elderly and disabled people.

If after this assessment, councils decide they need to make cuts because of a lack of funds, this would be likely to be legal.

But councils can’t let bus cuts leave a community that needs transport with no transport service at all.

And in some areas, councils have used community transport services – often minibuses driven by volunteers – to fill the gaps.

There could be other reasons for the fall in passenger numbers, though.

For the past couple of years, passenger numbers have also been falling in London, despite its relative protection from cuts.

Mayor Sadiq Khan has suggested this could be driven by fewer people going out, as Netflix and Deliveroo make staying at home easier and more tempting.”

https://www.bbc.co.uk/news/uk-46524510

Positive ageing

“At the Centre for Ageing Better, we often say that the UK is experiencing a social revolution. People now live much longer than their parents and grandparents did. A child born today has a one in three chance of living to the age of 100 – the advances we’ve seen in longevity are truly incredible.

The problem is, when we talk about the ‘challenges’ of an ageing population, we make it easy to fall in to the trap of focusing on just the problems – such as rising pension and health care costs – and forgetting about the immense opportunity of living longer lives.

For me, it’s important to remember that people in later life contribute massively to the economy – in the UK, there are over 10m over-50s in the workplace. The gross income of households with an individual aged 50+ amounted to 47% of total UK household income in 2014/15. Older people also contribute hugely to society; one in five people aged 50–64 in the UK are carers and around two-thirds of this age cohort make some form of contribution to their communities.

However, too many people are missing out on a good later life. Around 1.8 million households headed by someone aged 50 to State Pension Age are struggling to maintain their living standards and save for retirement. Many people would like to move to a more age-friendly home, but find there isn’t anything suitable near to where they live and are connected to their communities. And while we are living longer, the number of years we can expect to have good health as we age varies greatly depending on where in the country we live.

We need action to respond to and plan for this demographic change across public and private sectors.

Housing – We need more affordable and attractive ways of adapting and improving our homes. Every new home built should be ‘age-proof’ – adaptable and accessible, whatever people’s ages or abilities.

Work – We need to explore how new technologies can support people to manage health conditions in the workplace. Employers need to offer flexible working, training and development or older workers, and change recruitment processes to be inclusive.

Communities – We need good transport links, opportunities to get involved in civic life and places and outdoor spaces to meet people’s needs. We need more places to become Age-friendly Communities and commit to supporting residents to age well.

Health – We need to focus on preventing people from developing the health conditions and disabilities which reduce their quality of life. If we can help people to remain physically active for longer and support them to adopt healthier lifestyles, we can make great strides.

I think that the real challenge is to seize the opportunity of a good later life – and stop thinking about ageing as challenge to overcome.”

https://apolitical.co/question/how-do-we-confront-the-challenges-associated-with-ageing-populations/

“Average UK workers earning a third less than in 2008 – report”

“Research by the Trades Union Congress (TUC) found that the average worker has lost £11,800 in real earnings since 2008.

The UK has suffered the worst real wage slump among leading economies, said the union organisation.

The biggest losses have been in areas including the London borough of Redbridge, Epsom and Waverley in Surrey, Selby in North Yorkshire and Anglesey in north Wales, the studyfound.

Workers have suffered real wage losses ranging from just under £5,000 in the north-east to more than £20,000 in London, said the report.

The TUC general secretary, Frances O’Grady, said: “The government has failed to tackle Britain’s cost-of-living crisis. As a result, millions of families will be worse off this Christmas than a decade ago.

“While pay packets have recovered in most leading economies, wage growth in the UK is stuck in the slow lane.

“Ministers need to wake up and get wages rising faster. This means cranking up the pressure on businesses to pay staff more, especially at a time when many companies are sitting on large profits.”

https://www.theguardian.com/business/2018/dec/14/average-uk-worker-earn-third-less-than-2008-tuc-real-wage-report

“Ministers Sold Student Loans Book Worth £3.5bn For £1.7bn To Cut Public Debt”

Owl says: throwing out the baby, the bathwater AND the bath and then demolishing the bathroom …!

“Ministers who sold off student loans to cut government debt failed to get the best price for the taxpayer and stand accused of being “short-sighted”.

The sale in 2017 of the first tranche of student loans with a face value of £3.5bn raised just £1.7bn – a return of just 48p in the pound, the Public Accounts Committee has found.

The committee’s report says that, according to the Government’s own analysis, had it held on to the loans it would have recouped the £1.7bn sale price in just eight years.

As there was little chance all the loans would be repaid, ministers could not have expected face value but should have sought “the best possible deal”, MPs said.

“In this case, government received too little in return for what it gave up,” the report said.

“Treasury’s focus on reducing its ‘public sector net debt’ measure is a short-sighted approach which fails to convince us that the deal is the best one for public sector finances in the long term.”

https://www.huffingtonpost.co.uk/entry/government-sold-student-loans-book_uk_5bf5930ae4b03b230f9def5f